Green Economics 6/12

[Over an extended period ZNet has been publishing excerpts of chapters from Robin Hahnel’s latest book, Green Economics: Confronting the Ecological Crisis, available from M.E. Sharpe. Excerpts published here are not the full chapters which are made available inside the book. More information about the book and links to purchase it are below. Or, if you want, first, go to previous excerpts: Introduction / Chapter 1 / 2 / 3 / 4 / 5 / 6 / 7 / 8 / 9]


Mainstream economists have long regarded economic growth as something positive, and for many it continues to be their primary economic goal. On the other hand, many environmentalists increasingly view growth with suspicion, worrying that a growth imperative is at the bottom of our environmental problems. Growth is good . . . growth is bad . . . what are we to think? ….


The Growth Imperative: Beyond Assuming Conclusions


What are we to make of statements like “On a finite planet infinite economic growth is impossible” from ecological economists? Or “Capitalism is a system that must continually expand. No-growth capitalism is an oxymoron” from Marxists? A good place to start is by asking precisely what it is that is growing, because often economists are not talking about the same thing at all….


Ecological Economics and Growth


The growth of what ecological economists call throughput is limited. Supplies of different materials from the biosphere (and beneath) that we use as inputs in production are finite and limited, and the capacity of the biosphere (and the atmosphere above) to absorb material wastes is finite and limited as well. So infinite growth of throughput is impossible…. However, throughput is not gross domestic product (GDP). And when mainstream economists talk about growth, they mean growth of GDP…. GDP is the value of final goods and services produced during a year. It is measured in dollars, not in the units we use to measure different kinds of physical matter throughput….. So it is theoretically possible for GDP to grow infinitely even though throughput cannot grow infinitely provided “throughput efficiency” grows as fast as GDP, i.e. if there is enough of what is now called “decoupling.”


Marxism and Growth


Citing the master himself—“Accumulate, accumulate! That is Moses and the prophets!” —Marxists have long argued that capitalism is nothing if it is not about accelerating economic growth…. As John Bellamy Foster and Fred Magdoff put it in a recent editorial in Monthly Review Magazine: “No-growth capitalism is an oxymoron. . . . Capitalism’s basic driving force and its whole reason for existence is the amassing of profits and wealth through the accumulation (savings and investment) process. It recognizes no limits to its own self-expansion.” But the accumulation Marx referred to is an accumulation of surplus value, which he measured in hours of labor expended, not physical units of output, which means that capitalist accumulation of surplus value is not necessarily limited by the availability of physical matter any more than the growth of GDP is….


In the end the claim that infinite growth of capitalist accumulation of surplus value is impossible on a finite planet is no more compelling than the claim that infinite growth of GDP is impossible on a finite planet. In both cases, those who make the claim carelessly apply reasoning to value as if it were matter. Either conclusion may still be true, but would only follow if surplus value or GDP cannot grow unless throughput grows as well. Since this is precisely what is at dispute, and since neither facile argument addresses this issue, both ecological economists and Marxists who present the case that infinite growth is environmentally impossible in these ways are in effect guilty of assuming their conclusion.


However, this does not mean there is not an unhealthy and environmentally destructive growth imperative in today’s capitalist economies, and perhaps in any capitalist economy. It just means we must go beyond facile arguments that upon inspection prove not to be compelling….


Biases Against Leisure and Collective Consumption


The problem is not that human beings have become more and more economically productive—which is what people should mean when they say that, at least in theory, human economic well-being can grow without limit. Infinite economic growth should be a comment on the capacity of humans to continue to become more and more clever in how we go about our economic activities. It is an expression of faith that there is no inherent reason we cannot continue to satisfy our economic needs in an ever-shrinking portion of the twenty-four-hour day—if only we do not needlessly expand our economic needs!


When understood in this way, the problem is not increasing productivity or an economic system that promotes energetic and creative pursuit of increasing economic productivity. Instead, the problem is (1) what we do with increases in our productivity, and (2) how we expand economic needs into desires whose satisfaction does little or nothing to increase economic well-being….



Why not more leisure instead of more consumption?


Many sociologists, environmentalists, and progressives, but few mainstream economists, now see a tragicomedy unfolding: A social species, hard-driven to compete for status in a hierarchical society, is fast becoming like the proverbial lemmings, trapped in an economy where the primary means of demonstrating social status is through competitive consumption that yields diminishing aggregate benefits even as it accelerates destruction of the environment we depend upon….


Why not more collective instead of individual consumption?


While productivity increases taken as leisure put far less strain on the environment, as people who have calculated their ecological footprint know, not all consumption is created equal as far as the environment is concerned. Not only does eating a pound of hamburger tread more heavily on the environment than eating a pound of tofu, but individual consumption is more environmentally damaging than collective consumption, dollar for dollar. So the problem is not only that we take too little of our productivity increases as leisure and too much as consumption; it is compounded by the fact that we engage in too much individual consumption and too little collective consumption….


Jobs Versus the Environment Is Not the Problem


In the midst of the battle over amendments to the Clean Air Act in 1990, the Wall Street Journal reported that one out of three respondents in a national poll said that they personally felt they were likely to lose their job as a result of environmental regulation. But this fear is unwarranted. Economists identify three kinds of unemployment: cyclical unemployment, frictional unemployment, and structural unemployment. Stricter environmental standards have nothing to do with either cyclical or frictional unemployment. However, stricter environmental standards do, by design, change the mix of goods and services produced and the technologies used to produce them and thus can cause structural unemployment, which results when those out of work do not have the skills necessary for the available jobs, or live where available jobs are located. How serious is this threat?


First, we need to understand what is being accomplished by raising environmental standards at the price of creating some structural unemployment. … Any structural unemployment caused by improving environmental standards is part of making the economy more efficient by moving resources, including labor, out of activities where the costs outweigh the benefits into activities where the benefits outweigh the costs when all the costs and benefits are correctly accounted for. So what we are talking about are short-run transition costs to achieve long-run efficiency gains.

Second, empirical evidence indicates that the amount of structural unemployment caused by efforts to better protect the environment in the United States over the past two decades is insignificant compared to the amount of structural unemployment caused by trade and capital liberalization, technological change, and corporate downsizing. Eban Goodstein estimates that during the 1990s more than 2 million workers per year were laid off due to import competition, shifts in demand, or corporate downsizing, while less than 2 thousand workers per year lost jobs due to environmental regulations.


Third, we need to ask if there are ways to share more equitably the transition costs of whatever structural unemployment stricter environmental standards do create…. In Sweden, victims of structural unemployment receive unemployment compensation that is far more generous than in the United States and lasts longer, when necessary. Laid-off workers also receive free retraining and education carefully tailored to suit them for employment in industries and occupations where employment is growing. And if moving to a different part of Sweden is necessary, relocation expenses are covered as well.


Green Economics: Confronting the Ecological Crisis by Robin Hahnel is available from M.E. Sharpe.

To purchase the print edition please click here.

To order 180-day online access from the Sharpe E-text Center click here.

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